Conference Transcript - CVRX 2026-06-02

Brandon Vasquez, Analyst — William Blair

Hello everybody, my name is Brandon Vasquez. I am a research analyst here at William Blair covering medical devices and some animal health names. And I'm required to inform you that if you want to find a complete list of disclosures or potential conflicts of interest, please visit our website at williamblair.com. We're excited to have CVRX with us here. We have Kevin Hikes, the president and CEO, and Jared, the CFO here with us as well. They're gonna go through a corporate presentation. We'll go to a breakout after.

Kevin Hykes, CEO

Thank you, okay good morning thank you it's my pleasure to speak to you this morning I'm Kevin Hikes I've been the CEO of CVRX now for two years these are our forward-looking statements and risk factors additional details are on our website CVRX has developed the world's first autonomic neuromodulation therapy with the treatment of heart failure we operate in a 10.5 billion dollar prevalence based market opportunity with a well-defined patient population with significant unmet needs, and a highly differentiated therapy. And what I'd like to share with you is our continued work on our plan to drive Barostim to standard of care for the treatment of this condition. Heart failure is a burdensome disease, affecting nearly 6.7 Americans alone. It results in over a million hospital discharges, 1.3 million emergency room visits, more than 8 million physician office visits, and has annual costs expected to reach $70 billion by 2030. It's characterized by a progressive decline in quality of life and punctuated by increasingly frequent hospitalizations. When first diagnosed, patients are initiated on drug therapies, today called guideline-directed medical therapy or quad therapy for the four drugs that are used. A small percentage are also evaluated for a pacemaker-like technology called CRT, but many are not eligible. At the end of their journey, six to eight years later, 1% of these patients receive a left ventricular assist device or a cardiac transplantation, but unfortunately 99% of them do not and go on to hospice. In the meantime, in today's paradigm, patients are left suffering from significantly debilitating quality of life and heart failure symptoms. This is the paradigm that we're trying to change with Barostim therapy. Pharmaceutical quad therapy has been shown to improve survival in heart failure by one to six years when taken compliantly and at therapeutic doses. However, only 1% of patients ever reach therapeutic doses of all four of these drugs, and after one year, over 40% of them discontinue at least one of those drugs. The therapy has also not been shown to have much impact on quality of life or heart failure symptoms. This represents a meta-analysis of 18 studies showing very modest impact on exercise capacity, study, which is a surrogate for quality of life in this population. So the patients tell us that they're miserable, 66% report mobility problems, 68% have pain or discomfort, 76% can't get through their days effectively, and in multiple studies these patients again and again signal that they do not want to live any longer, they want to live better, and they would gladly trade off years of longevity for an improvement in their symptoms. So, Barostim addresses this population and this unmet need in the middle of the disease continuum. The physicians call these patients the walking wounded or the forgotten middle. And for 50 years, they have been sent home on medications and told that that's just the way the disease goes. Importantly, about 18 months ago, for the very first time, the Heart Failure Society of America published a consensus statement that says if after six months a patient is on best tolerated medication and is still symptomatic, it's time to try something else. This is a threshold moment for us and the handful of companies trying to change this paradigm. So that is our job, and that's our goal, is to bring these new device therapies to bear in this population that is so impacted by the disease. That purple section of the graph represents a $10 billion prevalence-based TAM. These patients are defined by New York Heart Class 3 or Class 2 with a recent Class 3 episode, an ejection fraction under 35%, and a blood marker called NT-ProBNP under 1600. That's effectively a way, a real-time way of measuring the stability or the intensity of someone's heart failure symptoms. The therapy itself is much like a pacemaker. It targets the neurohormonal pathways that are responsible for heart failure progression. So heart failure starts with an insult to the heart from a myocardial infarction, from disease, from cardiomyopathy, and it results in reduced output. That reduced output results in reduced signaling from the body's natural pressure sensors, which are called the baroreceptors. They're located on the carotid artery, on the outside of the carotid artery. They constantly monitor the cardiovascular system and send signals to the brain as to the status. That reduced sensing, because of the reduced cardiac output, leads the brain to believe that the body is in crisis. It interprets that reduced sensing as either acute hemorrhage or acute dehydration and as such activates the fight or flight response in an attempt to rescue the body. The fight or flight response involves cranking up the sympathetic activity, the accelerator effectively of the body, pulling back on the brake, reducing parasympathetic activity, and activating the renin-angiotensin system, which dumps very powerful neurohormones into the circulation in an attempt to rescue the body. It's important to note that that fight-or-flight response, in the case of heart failure, there is no automatic off switch for that response until or unless you restore the signals to the brain. So chronic exposure to those circulating neurohormones is what causes the progression of this disease. They are toxic to the heart, the kidneys, and the vasculature. Today's quad therapy, guideline-directed medical therapy, is called neurohormonal blockade. Heart failure at this point is a systemic disease, almost like a metastasized heart disease. So today's therapies attempt to shield those end organs from as many of those neurohormones as they can. It's imperfect. They can't shield from all the neurohormones. And the storm increases and abates often and overwhelms the drug effect. Our therapy operates on that very same principle, but upstream of neurohormonal blockade. We effectively restore signaling to the brain, turn down the fight or flight response, and really decrease the storm of neurohormones that neurohormonal blockade is trying to protect the body from. So we work in concert with these drugs, not instead of or against them. The system itself looks much like a pacemaker or defibrillator, it has a single lead that It is sutured on top of the baroreceptors, it has a wireless programmer that's used to adjust the system in the initial stages after implantation, and it's implanted in a 60-minute or less procedure with a remarkable freedom from complications. It's entirely extravascular, which means there are very few complications associated with infection or intravascular therapy. It requires a small incision in the neck and a pacemaker-like pocket in the chest. So the BEAT-HF trial, our pivotal trial, showed that Barostim is an effective, predictable, and durable therapy to improve quality of life for heart failure, despite the fact that it was enrolling the trial during the COVID-19 pandemic. It demonstrated a two times clinically meaningful improvement in exercise capacity and quality of life. 68% of patients improved at least one New York Heart Association class in their functional status. And we had a remarkable 94% responder rate to the therapy. The trial also showed a positive signal in the reduction of all-cause death, LVAD, and transplant. Although it did not reach statistical significance, it reduced those endpoints by 34%. Additional real-world evidence published since that trial has demonstrated a significant reduction in hospitalizations in patients receiving barostim therapy before and after. This data is from the Premier Healthcare Database, which is one of the largest real-world evidence data sets in the United States, comprising data from 1,300 U.S. hospitals, and it showed a remarkable 85% reduction in hospitalizations in patients before and after they received the therapy, with a p-value of .0001. And interestingly, this data set is as big as our pivotal trial. So we're exploring the use of real-world data sets like Premier to expand our label and indication based on some very interesting recent directives from fda in 2025 for the first time the fda published guidance on the acceptability of real world data in indication and labeling expansion and last month they published again further guidance and clarifications and examples of companies that have begun to do this successfully they've said that this real world data can be used to expand an indication or a label but cannot be used for a brand new device submission. They also said that these data sets have to be discussed in advance with FDA, almost like a prospective randomized trial IDE would be. And lastly, obviously, they said it's got to be high-quality data. It must be longitudinal in nature. It can't just be a snapshot, and it has to clearly identify the devices that are involved. We believe that with the right data, like that I just showed you in the prior slide, this is a very interesting pathway for CVRX and Barostim and may allow us to in fact expand our indication and label in advance of the readout of the benefit HF trial, which I'll talk about in a few minutes. So turning to our commercial strategy, it remains focused on three key elements. Number one, improving the productivity of our sales force. Number two, driving deep adoption in targeted centers versus widespread adoption in a wide range of centers. And number three, systematically breaking down the barriers to the adoption of the therapy in the market. As it relates to the sales team, we're pleased with the maturation of our sales force. We had to turn over roughly 70% of our sales team over the last 18 months, but we've got remarkable talent on board and we're now working hard to get them up to speed and productive in their roles. In addition, we're adding to that team with an increasing number of heart failure APPs, those are physician assistants and nurse practitioners, and heart failure nurses because we are growing in our appreciation for their role in treating this disease and their unique ability to influence physician behavior. So at a national level, we're adding APPs with deep experience to work on program building across the country. Locally, we're hiring APPs and nurses with industry experience, in some cases as sales reps or territory managers. And we're also strengthening our clinical support teams with early career APPs and nurses that don't yet have industry experience. So this is building on some important lessons we've learned over the last 18 months. As it relates to driving deeper adoption, this starts with an aligned network of stakeholders, referrers in the community and in the heart failure centers, prescribers or heart failure specialists in those centers, and surgeon partners standing by to implant the device, all receiving support and air cover from clinical and administrative champions. patients. With that stakeholder network in place, we can establish Barostim-specific workflows. These workflows help physicians in the community understand the patients that can benefit, identify candidates, and refer them to the heart failure specialists for evaluation. Those specialists, if they determine a patient is a candidate, then refer and prescribe the therapy to a surgeon who implants the device before sending the patient back to where they started for long-term care. So the effective implementation of those workflows is what allows the right patients to be identified, the surgeries to go well, and consistent positive clinical outcomes as a result. And it's those consistent outcomes that start to generate a flywheel effect in these centers and result in this becoming not just an episodic therapy that's used for certain patients by certain physicians, but more something that's part of how they treat the disease. That's ultimately our goal in changing the standard of care, is baking this therapy into the recipe for how heart failure is treated. It's important also to note, even where we start to see that flywheel taking effect, there remains significant further opportunities. So this is data as of the end of 2025 that shows in the top 20% of our 250 centers, so that was about 51 centers at the time, the average annual implant volume was 19 units. So that's about one and a half patients per month. That represents in these centers less than 7% of their eligible volume of patients. So tremendous opportunity, even where it's starting to catch on, tremendous opportunity to go deeper, reach more patients, and create significant value. The third element of our strategy relates to breaking down the barriers that exist in the market to the adoption of therapy, and there are three of them. The first is increasing awareness of the therapy around referrers and patients as to where this fits in their disease journey. Number two, developing a broader suite of clinical evidence and physiologic evidence to help physicians of differing levels of conservatism get comfortable with the therapy and how and why it works. And lastly, as always, improving patient access to the therapy. So on the awareness front, as I think I mentioned in the prior slide, we're increasingly focused on the community and talking to physicians, APPs, and RNs that treat the bulk of our patients in the community setting. That involves increasing our investments in awareness amongst the general cardiologists through medical education and Congress attendance and Congress symposia presentations. It continues our work focused on the APPs, but now expands into those nurses that work for the APPs in the community. Later this month, we will be one of the largest supporters and presenters at the American Association of Heart Failure Nurses Conference, so that's a first for us. Year to date, our investment in local medical education programs has resulted in a 40% increase recent programs as of the end of May. On the evidence front, the evidence development strategy that we put in place last year is now generating a steady stream of evidence supporting the core BHF clinical results. Those demonstrated clearly that the therapy was safe, effective, and durable at improving quality of life out to two years. What we're now focused on is building out further evidence on the other and secondary clinical outcomes associated with the therapy. Most importantly, now multiple publications on the reduction in hospitalization associated with barostim, multiple publications on the interesting discovery that barostim patients can better tolerate those medications that many could not. Also, the reductions in arrhythmia and improvements in kidney function that are associated with the therapy. On the other side, we're spending a lot of time trying to better publish and describe the mechanism of action, why the therapy works as well as it does and how it works. That includes important new insights into the hemodynamics behind the therapy, into the effect on positive remodeling of the left ventricle, changes in ejection fraction, improvements there, and the reduction of inflammation systemically. These data sets are now increasingly visible at key scientific conferences and in the most important journals in the heart failure community. An example of some of these are two recent publications highlighting new insights into the physiology behind the therapy. On the left side of the slide is a case study on a patient here from the University of Chicago showing the effect of turning off barostim therapy in a patient that had been treated for over a year. And what the researchers saw was a dramatic increase in systemic vascular resistance within eight minutes of turning off the therapy, and that's a key pathophysiologic component of heart failure. So dramatic now evidence that this is in fact reducing systemic vascular resistance. That's one of the reasons we think it works as well as it does. On the right, the first ever publication of the effective barostim on inflammation. In this case, showing dramatic reductions in TNF-alpha in patients before and after receiving the therapy. So important new insights, not just on the clinical outcomes, but how and why it works. We've recently initiated center activation and patient enrollment in the landmark benefit HF trial, which we believe will be the largest therapeutic device trial ever done in heart failure by a factor of two and a half times. This will expand our population, it's successful, to patients with EFs under 50. So from 35 up to 50, and patients with NT Pro up to 5,000. So taking the current ceiling of 1,600, up to 5,000. We'll enroll 2,500 patients at 150 centers, largely in the United States. The primary endpoints are mortality and heart failure decompensation, so-called the hard endpoints, and we'll follow these patients for two years. So we believe it will take four to five years to fully enroll this trial and another two years to follow those last patients. Importantly as well, the IDE Category B coverage from CMS provides full coverage and payment for Medicare and Medicare Advantage patients enrolled in the trial without the need for prior authorization. As a result of that coverage, we expect the net cost of this trial to be between 20 and 30 million dollars, spread over the five to seven year period. If successful, Benefit-HF will triple our market opportunity from 339,000 patients to 983, roughly tripling our TAM from 10 billion to 30 billion dollars. The last barrier is patient access, and our recently announced Humana Medicare Advantage coverage policy will give us a significant new tool in fighting for patient access. Humana in May issued a Medicare Advantage coverage policy for Barostim therapy that was effective on May 1st. They are the second largest Medicare Advantage provider in the United States, covering 5.2 million members across 46 states. And the policy not only covers Barostim in its current FDA indication, but also patients that are part of our trial. We knew that already, but it's helpful to see this here. It's almost a belt in suspenders. We intend to maximize the impact of this development in our patient access work, number one, by integrating the reference to this coverage policy in each and every prior authorization, regardless of payer, number two, by leveraging this development in the appeals processes, both with all payers we are appealing and at all stages in that process, and importantly, on a strategic level, leveraging this development in our conversations around future coverage policy with other payers in the market. Data since the Category 1 implementation in January shows an increase in our 30-day Medicare approval rates to 49% as of the end of April. This compares to 44% as of the end of 2025 and 31% as of the end of 2024. Importantly, the temporary delays that were associated with AI-based prior authorization processing have now been addressed, and we're seeing those rates return to the early Q1 rates we were seeing post-CAT-1. In fact, the April stand-alone 30-day rates for Medicare Advantage approvals are now north of 60%. So we're comfortable, we're through that somewhat surprising blip, and that we're now fully leveraging the effect of the Category 1 decision put into place January 1st. So taken as a whole, these developments contribute to the significant and comprehensive progress we're making in improving patient access. On the left side of this pie chart, you see that 33% of our indicated population are Medicare Advantage patients. The Humana coverage policy and the elimination of the Category 3 automatic denials as a result of Cat 1 are important levers to expand coverage within that population. On the right side, you see that a third of our patients are traditional Medicare. And I'm pleased to report that as of the latest CMS dataset, all MACs are processing claims and 96% of submitted claims for traditional Medicare patients are being paid. So significant progress in those two populations. Category 1 also helps with TRICARE and Medicaid and the VA, and with some commercial payers, all of whom have automatic denial policies for Category 3 codes. So again, significant comprehensive work in improving patients' access to this therapy. So our Q1 2026 results were worldwide revenue of $14.8 million, U.S. revenue of $13.7 million, U.S. territories of 56, and 257 active in planning centers. Our gross margins were 87% in our cash balance as of the end of Q1 was $72.3 million. Our guidance as discussed on the May 11th earnings call was Q2 revenue of $15.1 to $16.1 million and full year revenue for 2026 of 63 to 67 million dollars with gross margins of 85 to 87 percent and operating expenses from 103 to 107 million dollars so I hope you appreciate the opportunity that we have ahead of us at CVRX to positively impact the standard of care for a major global health condition to address a significant unmet need and improve the quality of life of hundreds of thousands of patients and in doing so to build a transformational company that's capable of sustaining long-term growth. Thank you. Sure.

Brandon Vasquez, Analyst — William Blair

Kevin, maybe just one before we go to the breakout session here. Just the recent announcement of Humana. Talk to us a little bit about, you know, there's a complicated world of reimbursement here. You already had coverage. What exactly does the Humana coverage do for you and do you need more of the MA plans to you have a similar coverage policy?

Kevin Hykes, CEO

Yeah, that's a great question. So the Humana decision, that was actually our first written coverage policy. And typically, you start with the small regional players and you work your way up towards the big guys. In this case, and to some degree, surprisingly to us, Humana, who was one of the absolute toughest, preemptively issued this written coverage policy. So this was probably 18 to 24 months sooner than we would expect. So it was a very pleasant development. And as is often the case, this starts a bit of a domino effect. It allows you to then approach other payers, both from the bottom, the small ones, but also Humana's number one competitor in Medicare Advantage is UnitedHealth. And so this allows us to go into UnitedHealth and suggest that maybe it's time for them also to write that policy. Without a written policy, you're stuck fighting with prior authorizations and appeals and pushing each and every denial all the way to the end to ultimately prevail. So, the Humana decision was probably in part due to Cat 1 and part due to our consistent pressure and consistent wins at the administrative law judge level, the end of that painful process.

Brandon Vasquez, Analyst — William Blair

And it sounds like you guys were happy with what the actual coverage policy came up with.

Kevin Hykes, CEO

It covers everyone that's indicated by FDA today and it adds that, reasserts the coverage for patients in our benefit HF trial.

Brandon Vasquez, Analyst — William Blair

Perfect. Well, I'm sure we'll go more into detail on this in the breakout. I figured we'd get one or two there in the webcast but we'll give everyone a couple minutes to go out to the breakout room. We are going to, one second, we are going to Burnham B for the breakout room. Great, thank you, thank you.